Our preliminary analysis on the mutant mice has revealed distinct functions of SMAD genes in multiple biological processes. We showed that SMAD2 and SMAD4 are needed for gastrulation, SMAD5 for angiogenesis, and SMAD3 for establishment of the mucosal immune response and proper development of the skeleton. Our recent effort is focused on SMAD4, which is a common mediator of TGF-beta signals. SMAD4 is also called DPC4 (deleted in pancreastic cancer locus 4). Mutatons of SMAD4 has been detected in pancreatic cancer, colon cancer, cholangiocellular carcinoma, gastric polyposis, and adenocarcinomas. Our study indicates that SMAD4 is essential for embryonic development in mice, as loss of SMAD4 results in lethality at E67 due to impaired extraembryonic membrane formation and decreased epiblast proliferation. SMAD4-heterozygous mice developed gastric polyposis and cancer due to haploinsufficiency. Using SMAD4-Co mice, we have demonstrated that SMAD4 deficiency could cause tumor formation in mammary tissue, skin, liver, forestomach, and colon. Deletion of SMAD4 in hepatic cells also results in iron accumulation, a disease mimicking human hemochromatosis. In the past year, we focused on studying SMAD4 in cholangiocellular carcinoma (CC). CC is the second most common primary liver cancer, and is associated with a poor prognosis. It has been shown that CCs harbor alterations of a number of tumor-suppressor genes and oncogenes, yet key regulators for tumorigenesis remain unknown. Here we have generated a mouse model that develops CC with high penetrance using liver-specific targeted disruption of tumor suppressors SMAD4 and PTEN. In the absence of SMAD4 and PTEN, hyperplastic foci emerge exclusively from bile ducts of mutant mice at 2 months of age and continue to grow, leading to tumor formation in all animals at 4-7 months of age. We show that CC formation follows a multistep progression of histopathological changes that are associated with significant alterations, including increased levels of phosphorylated AKT, FOXO1, GSK-3beta, mTOR, and ERK and increased nuclear levels of cyclin D1. We further demonstrate that SMAD4 and PTEN regulate each other through a novel feedback mechanism to maintain an expression balance and synergistically repress CC formation. Finally, our analysis of human CC detected PTEN inactivation in a majority of p-AKT-positive CCs, while about half also lost SMAD4 expression. These findings elucidate the relationship between SMAD4 and PTEN and extend our understanding of CC formation.